Vox laments regulatory delays

Regulatory delays are hampering growth, says Vox CEO Tony van Marken.

CEO Tony van Marken says the only missing pieces of Vox's puzzle are regulatory issues, such as those governing geographic number portability, local loop unbundling and carrier pre-selection.

He points out that the company has been investing in its network, and now has a full range of offerings to take on customers across the range from enterprise to consumer.

Now that it has established itself in the market, it just needs to add subscribers, Van Marken says. “Brick by brick, customer by customer, one day at a time, step by step... It's like climbing a mountain.”

However, regulatory delays by the Independent Communications Authority of SA (ICASA) in delivering on local loop unbundling and geographic number portability are keeping it from expanding its customer base as fast as it would like, he says.

His comments come on the back of recent complaints by Independent Democrats leader Patricia de Lille, who has said ICASA is “far behind” in promulgating regulations that would enable the Electronic Communications Act (ECA).

Earlier this month, she argued that regulatory delays hamper liberalisation of the telecommunications sector, which has a knock-on effect on job creation. “Communication can be used as a tool to help SA come out of the recession.”

ICASA is working on 35 sets of regulations under the ECA. These include local loop unbundling and the review of handset subsidy regulations.

Full suite

Vox has 16 000 corporate customers and 145 000 consumer subscribers, and its 13% revenue growth during the year to August, to R2.083 billion, was mainly organic growth, at 75%.

Van Marken explains the company is constantly developing products that it can offer to its current base of subscribers, which aids revenue growth.

It has also developed a plan to limit the effects of interconnection rates. The staggered approach will see rates drop to 80c a minute by March 2012, which will wipe out any competitive advantage least-cost routing companies have.

However, one of the six products the company developed during the year – Cristal Vox – is designed to mitigate this.

“Vox has built a carrier-class network over the last 12 years, which we can exploit to offer a full range of voice and data services. Fortunately, that enables us to migrate voice traffic from a traditional least-cost routing technology, to a next-generation platform that provides our customers with a high-quality solution at an affordable price,” Van Marken says.

He points out that Vox Orion is slowly moving its customers onto Cristal Vox, and this will result in longer-term margin gain, although the unit will be under pressure for two years. Orion accounts for the bulk of Vox's revenue, at R1.3 billion.

Vox's other new products, launched during the year, are Eyeris, Fishbone, Supafone, Legogo and Vox Tickybox.

Spending to grow

In the past year, Vox has invested in its network, with R50 million of R60 million going into network-related infrastructure. This year, the company will spend R50 million across the board, which includes network upgrades, data centres and computing systems.

Van Marken says Vox could have been more profitable, but chose to invest in its networks, which will pay dividends in future, in the form of being able to serve more customers.

While the company did not escape the effects of the recession – writing off R12 million in bad debt – Van Marken points out it is still strongly cash generative, with R185 million cash generated from operations during the year.

In the previous year, before the full impact of the recession, the company wrote off R700 000, and generated cash of R148.5 million.

“You have to be doing something right to serve 16 000 corporate customers and 145 000 consumers on a daily basis and generate cash.”

Related stories:

• Vox sees interconnect gains
• De Lille laments regulatory delays

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